Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Textbook Question
Chapter 11.2, Problem 7P
In Example 11.3, suppose you want to run five simulations, where the probability of passing inspection is varied from 0.6 to 1.0 in increments of 0.1. Use the RISKSIMTABLE function appropriately to do this. Comment on the effect of this parameter on the key outputs. In particular, does the probability of passing inspection have a large effect on when production should start? (Note: When this probability is low, it might be necessary to produce more than 25 batches, the maximum built into the model. Check whether this maximum should be increased.)
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Chapter 11 Solutions
Practical Management Science
Ch. 11.2 - If the number of competitors in Example 11.1...Ch. 11.2 - In Example 11.1, the possible profits vary from...Ch. 11.2 - Referring to Example 11.1, if the average bid for...Ch. 11.2 - See how sensitive the results in Example 11.2 are...Ch. 11.2 - In Example 11.2, the gamma distribution was used...Ch. 11.2 - Prob. 6PCh. 11.2 - In Example 11.3, suppose you want to run five...Ch. 11.2 - In Example 11.3, if a batch fails to pass...Ch. 11.3 - Rerun the new car simulation from Example 11.4,...Ch. 11.3 - Rerun the new car simulation from Example 11.4,...
Ch. 11.3 - In the cash balance model from Example 11.5, the...Ch. 11.3 - Prob. 12PCh. 11.3 - Prob. 13PCh. 11.3 - The simulation output from Example 11.6 indicates...Ch. 11.3 - Prob. 15PCh. 11.3 - Referring to the retirement example in Example...Ch. 11.3 - A European put option allows an investor to sell a...Ch. 11.3 - Prob. 18PCh. 11.3 - Prob. 19PCh. 11.3 - Based on Kelly (1956). You currently have 100....Ch. 11.3 - Amanda has 30 years to save for her retirement. At...Ch. 11.3 - In the financial world, there are many types of...Ch. 11.3 - Suppose you currently have a portfolio of three...Ch. 11.3 - If you own a stock, buying a put option on the...Ch. 11.3 - Prob. 25PCh. 11.3 - Prob. 26PCh. 11.3 - Prob. 27PCh. 11.3 - Prob. 28PCh. 11.4 - Prob. 29PCh. 11.4 - Seas Beginning sells clothing by mail order. An...Ch. 11.4 - Based on Babich (1992). Suppose that each week...Ch. 11.4 - The customer loyalty model in Example 11.9 assumes...Ch. 11.4 - Prob. 33PCh. 11.4 - Suppose that GLC earns a 2000 profit each time a...Ch. 11.4 - Prob. 35PCh. 11.5 - A martingale betting strategy works as follows....Ch. 11.5 - The game of Chuck-a-Luck is played as follows: You...Ch. 11.5 - You have 5 and your opponent has 10. You flip a...Ch. 11.5 - Assume a very good NBA team has a 70% chance of...Ch. 11.5 - Consider the following card game. The player and...Ch. 11.5 - Prob. 42PCh. 11 - You now have 5000. You will toss a fair coin four...Ch. 11 - You now have 10,000, all of which is invested in a...Ch. 11 - Suppose you have invested 25% of your portfolio in...Ch. 11 - Prob. 47PCh. 11 - Based on Marcus (1990). The Balboa mutual fund has...Ch. 11 - Prob. 50PCh. 11 - Prob. 52PCh. 11 - The annual demand for Prizdol, a prescription drug...Ch. 11 - Prob. 54PCh. 11 - The DC Cisco office is trying to predict the...Ch. 11 - A common decision is whether a company should buy...Ch. 11 - Suppose you begin year 1 with 5000. At the...Ch. 11 - You are considering a 10-year investment project....Ch. 11 - Play Things is developing a new Lady Gaga doll....Ch. 11 - An automobile manufacturer is considering whether...Ch. 11 - It costs a pharmaceutical company 75,000 to...Ch. 11 - Prob. 65PCh. 11 - Rework the previous problem for a case in which...Ch. 11 - Prob. 68PCh. 11 - The Tinkan Company produces one-pound cans for the...Ch. 11 - Prob. 70PCh. 11 - In this version of dice blackjack, you toss a...Ch. 11 - Prob. 76PCh. 11 - It is January 1 of year 0, and Merck is trying to...Ch. 11 - Suppose you are an HR (human resources) manager at...Ch. 11 - You are an avid basketball fan, and you would like...Ch. 11 - Suppose you are a financial analyst and your...Ch. 11 - Software development is an inherently risky and...Ch. 11 - Health care is continually in the news. Can (or...
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- Big Hit Video must determine how many copies of a new video to purchase. Assume that the companys goal is to purchase a number of copies that maximizes its expected profit from the video during the next year. Describe how you would use simulation to shed light on this problem. Assume that each time a video is rented, it is rented for one day.arrow_forwardBased on Marcus (1990). The Balboa mutual fund has beaten the Standard and Poors 500 during 11 of the last 13 years. People use this as an argument that you can beat the market. Here is another way to look at it that shows that Balboas beating the market 11 out of 13 times is not unusual. Consider 50 mutual funds, each of which has a 50% chance of beating the market during a given year. Use simulation to estimate the probability that over a 13-year period the best of the 50 mutual funds will beat the market for at least 11 out of 13 years. This probability turns out to exceed 40%, which means that the best mutual fund beating the market 11 out of 13 years is not an unusual occurrence after all.arrow_forwardThe game of Chuck-a-Luck is played as follows: You pick a number between 1 and 6 and toss three dice. If your number does not appear, you lose 1. If your number appears x times, you win x. On the average, use simulation to find the average amount of money you will win or lose on each play of the game.arrow_forward
- Suppose you simulate a gambling situation where you place many bets. On each bet, the distribution of your net winnings (loss if negative) is highly skewed to the left because there are some possibilities of really large losses but not much upside potential. Your only simulation output is the average of the results of all the bets. If you run @RISK with many iterations and look at the resulting histogram of this output, what will it look like? Why?arrow_forwardYou have 5 and your opponent has 10. You flip a fair coin and if heads comes up, your opponent pays you 1. If tails comes up, you pay your opponent 1. The game is finished when one player has all the money or after 100 tosses, whichever comes first. Use simulation to estimate the probability that you end up with all the money and the probability that neither of you goes broke in 100 tosses.arrow_forwardLarge-scale integrated (LSI) circuit chips are made in one department of an electronics firm. These chips are incorporated into analog devices that are then encased in epoxy. The yield is not particularly good for LSI manufacture, so the AQL specified by that department is 17% while the LTPD acceptable by the assembly department is 47%. Assume the company is willing to accept a consumer's risk of 10 percent and a producer's risk of 5 percent. a. Find the sample size. Use Exhibit 10.16. Note: If the exact value of the computed LTPD/AOQ ratio does not appear in Exhibit 10.16, use the next higher ratio. (Round up your answer to the next whole number.) Sample size b. How would you tell someone to do the test? Randomly sample LSI using the sample size from part a, the lot if more than defective.arrow_forward
- The probability that a mobile phone is stolen in an electronic shop is 0.0008. If 8500 mobile phones are sold, what is the approximate Poisson probability that 5 or fewer will be stolen? A- 0.327 B- 0.833 C- 0.781 D- 0.256arrow_forwardLarge-scale integrated (LSI) circuit chips are made in one department of an electronics firm. These chips are incorporated into analog devices that are then encased in epoxy. The yield is not particularly good for LSI manufacture, so the AQL specified by that department is 9% while the LTPD acceptable by the assembly department is 44%. Assume the company is willing to accept a consumer's risk of 10 percent and a producer's risk of 5 percent. (Use Exhibit 10.16.) (pictured below) A. Find the sample size. (Round up your answer to the next whole number.) B.How would you tell someone to do the test? Randomly sample LSI using the sample size from part a, reject the lot if more than _____ defective.arrow_forwardWhat are the pros and cons of starting a simulation with the system empty? With the system in equilibrium?arrow_forward
- Large-scale integrated (LSI) circuit chips are made in one department of an electronics firm. These chips are incorporated into analog devices that are then encased in epoxy. The yield is not particularly good for LSI manufacture, so the AQL specified by that department is 0.15 while the LTPD acceptable by the assembly department is 0.40. Assume the company is willing to accept a consumer's risk of 10 percent and a producer's risk of 5 percent. Find the sample size. Use Exhibit 10.16. Note: if the exact value of the computed LTPD ÷ AOQ ratio does not appear in Exhibit 10.16, use the next higher ratio. Note: Round up your answer to the next whole number. How would you tell someone to do the test?arrow_forwardA hotdog vendor buys hotdogs for $4 and sells them for $8 during the day to tourists. At the end of the day and leftover hotdogs are sold for $2. If the vendor follows a simply news vendor model for stocking what is the desirable probability that the hotdog vendor does not buy enough hotdogs to meet his daily demand? 25% 33% O 50% 67% O 75%arrow_forwardSee how sensitive the results in Example 11.2 are to the following changes. For each part, make the change indicated, run the simulation, and comment on any differences between your outputs and the outputs in the example. a. The cost of a new camera is increased to $500. b. The warranty period is decreased to one year. c. The terms of the warranty are changed. If the cam- era fails within one year, the customer gets a new camera for free. However, if the camera fails between 1 year and 1.5 years, the customer pays a pro rata share of the new camera, increasing linearly from 0 to full price. For example, if it fails at 1.2 years, which is 40% of the way from 1 to 1.5, the customer pays 40% of the full price. d. The customer pays $50 up front for an extended warranty. This extends the warranty to three years. This extended warranty is just like the original, so that if the camera fails within three years, the customer gets a new camera for free.arrow_forward
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